Ready, Set, Earnings!
Ready for Volatility?
Dear Bottarelli Research Member,
Good morning – and get ready for some intense volatility.
Now that we’re in the heart of earnings season, I fully expect to see some heavy-hitters making large price moves. For example, Intel announces earnings after today’s close. Then JP Morgan kicks off the financial reporting tomorrow morning, followed by Citigroup and Government (er, I mean Goldman) Sachs before Thursday’s open. And to round it off, Google reports after Thursday’s close. Allow me a second to wipe the beads of sweat off my forehead.
Faced with this rash of earnings reports, we must continue to trade as quickly and nimbly as possible. Earnings news from Johnson & Johnosn (JNJ – NYSE) has pushed the markets lower this morning, but that can certainly change at the drop of a dime. From a chart perspective, it appears like the Blue Chips could once again roll over just below the 10,000 level, but we all know that the “dip-buyers” have been an unrelenting bunch. All it could take is one strong earnings report to push above 10,000.
Faced with this situation, we’re holding a relatively light trading ledger, which includes the GMCR October 70 Calls (QGM JN) and the GG October 42.50 Puts (GAG VV). We got a nice entry price on GMCR yesterday at $2.60, but today’s market weakness has once again pushed GMCR shares down to yesterday’s low. If this level holds, we’ll be in good shape. In fact, if we have a nice opportunity to add to our position at these lows, you’ll be the first to know.
In terms of GG, I admit that it’s been a bumpy ride. My intention was to have you hold this position for a gold pullback (I think it will be coming at anytime now). But as you know, these puts triggered our stop before I issued my hold alert, which could have filled orders for some positions.
Please understand that I’m trying to give the best advice within a very volatile market. In that spirit, setting stop limit orders could result in price triggers on any quick up or down move. While this is a safe way to trade, sometimes setting these orders could sell you out of a good trading position. As your editor, I’ll do my best (as always) to give you my assessment of every trading situation. But sometimes, I could still be following a position that you’ve been stopped on. That’s just the nature of trading. Now, to keep everyone one the same page, go ahead and sell your GG October 42.50 Puts (GAG VV) if you haven’t already done so. That way, we can all maintain portfolio consistency. If gold stocks do drop, as I expect, we’ll jump into a new play with better entry prices.
And as always…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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